publication . Article . 2011

Value Relevance of Embedded Value and IFRS 4 Insurance Contracts.

Rebecca Chung-Fern Wu; Audrey Wen-hsin Hsu;
Open Access
  • Published: 31 Mar 2011 Journal: The Geneva Papers on Risk and Insurance - Issues and Practice, volume 36, pages 283-303 (issn: 1018-5895, eissn: 1468-0440, Copyright policy)
  • Publisher: Springer Science and Business Media LLC
Abstract
In light of the recent exodus of foreign insurers from Taiwan and the local insurers’ outcries against the International Financial Reporting Standard (IFRS) 4 Insurance Contracts, we examine the value relevance of financial statements for life insurance firms, with particular interests to the embedded value (EV) disclosure. We find that the EV of equity has an incremental information role for book value of equity, which indicates that the accounting mismatching problem in the insurance industry creates a demand for fair value accounting. The fair value of liabilities under IFRS 4 Phase 2 has been disputed globally by accountants, actuaries, academia and regulato...
Subjects
free text keywords: Economics and Econometrics, Accounting, General Business, Management and Accounting, Finance, Embedded value, Life insurance, business.industry, business, Mark-to-market accounting, Business value, Fair value, Economics, Actuarial science, Book value, Insurance policy, IFRS 4
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